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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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Us 32, Steve Mcmahon 14, Europe 14, Washington 13, David Walker 13, U.s. 12, America 12, Schwab 9, Nespresso 9, Boehner 8, Geico 8, Dell 6, Steve 6, Becky 6, Ireland 5, Jim 5, Lipper 5, China 5, S&p 5, Barry Knapp 5,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    December 3, 2012
    6:00 - 8:59am EST  

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good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is off. we have two well-known market voices joining us. barry knapp and richard bernstein. we have a lot to talk about. thanks for coming in. we'll start things off in just a moment. we do want to begin with the markets and that looming fiscal cliff. the dow finishing november lower for the second consecutive month. the blue chips falling half a percent in november. and #% sinnasdaq and s&p did fi higher last month. six out of ten sectors managed to post a gain.
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consumer discretionary stocks up the most. utilities the biggest losers. and while individual trading sessions may have been choppy, it was another month of low volatility. the vix remained below 20 for the fourth consecutive month and that's the longest streak since february of 2007. a big part of the market story has obviously been a big topic dominating the sunday talk shows. tim geithner arguing republicans need make the next move in negotiations. >> republicans have said that they don't like those reforms or they would like to do more. and if that's true, then they should tell us what they would like as an alternative. build on those, tell us how. but we can't react to anything until we see the details of the proposal and we need it on the rates and revenue side as well as on the spending side. we've given them our best view what makes sense for the country. >> meantime john boehner says that his party has a plan and he has already offered dozens of
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alternatives. >> you can cap deductions at a percent of income, that would be one way to get there. could you eliminate certain deductions for those wealthiest in our country. >> joining us on the topic is david walker. he's on his way here right now. >> and in global market news, a lot of talk about china this morning. a final reading of hsbc's manufacturing purchasing manager's survey for china rising in november, first time above the key 50 mark which indicates expanding rather than contraction. it's been since october of last year. also abroad greece announcing it will buy back bonds through a dutch auction. the set up whether allow athenss to assess the level of demand before setting a final bryce for the deal. part of the country's efforts to cut its about a along debt. and in germany, merkel is not
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ruling out the possibility of notifying greece some of its debt once athens finances are in better shape. angela merkel told a german tabloid that the question of the so-called haircut can be revisited. in the past, merkel's government had ruled out forgiving any debt. >> in corporate new, ubs is reportedly close to a settlement. the "new york times" says the swiss bank is expected to pay horn $450 million over claims that some of its employees submitted false libor rates. that's pretty huge story and we will take a look and ten to see what happens with this. also morgan stanley trader is under investigation by cme regulators over trades and treasury futures four years ago. at the time he was employed by goldman sachs. he's now head of global interest rates products at morgan stanley. the probe is aimed at establishing whether hadden's late trades hat manipulate
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closing prices and made other trades more profitable. also singapore airline says that it is in talks with interested parties to sell its 49% stake in virgin atlantic. delta is reportedly among the potential suit ors. delta is said to want to gain access on injury gain's landing rights at london heathrow. >> biggest international hub h around. i think an dwderson is really g. it's profitable and we had the story about the older jets. just if you have financial flexibility, you can do things like this. >> you sold me on the idea of -- plus i started thinking about being the first on the new planes. and they're not super old planes. >> no. and you redo the insides. it's different than -- it's like an old house sort of.
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delta totally lost its way. after being a really good airline through the '60s and '70s, brought in some mckenzie type and -- anyway, let's talk about macao. growth rates in the world's largest casino market have drdr due to lower spending from big gam blers. but overall revenue has remained solid. are you still going without the middle name? >> i have no middle name. that's right. >> except for the one that joe has given you. >> you have given me one. >> richard fing burnstien. >> no g. >> is that not sghool barrcool? barry, do you have a middle name? >> charles. >> what happened with you? do you have
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sisters? >> no. nobody in my family has middle names. my parents didn't. >> so this is a listening line of -- >> generations upon generations of -- >> generations upon generations. >> richard bernstein is pretty common. you don't put a middle name in there -- all right. china's privately owned dalian wanda group says it's in talks with a well-known hotel chains for acquisition opportunities in the united states. we just call it wanda. wanda has interests in real estate, tourism and department stores that bought u.s. based movie theater chain amc entertainment for $2.6 billion back this september. glad i know this so that when i see it i'll know what i'm talking about. wanda's chairman says his
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company will invest $10 billion in the united states over the next can decade and is in talks with famous hotel brands for acquisitions in places like washington, d.c., new york and los angeles. and the strike at the port of los angeles long beach is entering its seventh day this morning. contract talks between clerical workers and shippers have resumed. the walkout is dramatically slowed activity at the nation's a busiest cargo complex, dockworkers have refused to cross picket lines. >> this is a big deal. i don't know if you think this will have economic impact down the road. national retail federation is worry that had it will spread to the east coast just ahead of the christmas holidays when so many people are out shopping. really a bad time for them. >> it could. l.a. and long beach, biggest port in the united states. >> did you see on the waterfront? you don't mess with -- >> it's the clerical workers that are striking.
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>> it is? i'm not afraid of that. >> the dock workers don't want to cross the picket line of the clerical workers. >> oh, i'll cross that line. i thought it was the guys with the big boxes and they drop boks on you if you cross that -- will do you remember that? >> i lived in hoboken and i saw parts of it. the chief executive of news international will be stepping down at the end of the year. tom ran the scandal that hit the british arm of news corp. he's been with the company for more than 20 years. we mentioned once again you did see a down month for at least the dow, down by about half a percent. this morning you do see modest green arrows. dow futures up very moderately as are the s&p futures and the nasdaq futures. if take you a look at what's been happening in europe, you'll see a similar story there. actually a little stronger gains.
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in france, the cac up by about two-thirds of 1%. in germany, the dax up by 0.4% and ftse in london is up by a quarter percent. in asia overnight, you did see the hang seng down by about 1.2%. shanghai composite down, as well, down by 1%. in consider rea, the kospi up by 0.6%. oil prices have been a little weaker. down by about seven crept cents. and ten year note yielding 1.61%. that's been stuck in a tight range for quite a while. take a look at the dollar this morning. you'll see the euro at this point is still above 1.30, 1.3029 even though the dollar down across the board. dollar-yen at 82.10. gold prices this morning are up by about $8. as the fiscal cliff approaches, we're wondering what we can expect from the markets. our guest hosts again barry knapp and richard bernstein.
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barry, you're concerned about the direction the talks have taken. >> yeah, it's interesting as i actually traveled through europe last week, there is all this focus on the timing of getting a deal. but there is not nearly enough focus on what does the deal actually look like, what's the composition of the deal. and in fact the europeans were very amenable to my point of view on this, which is you think back to a year ago when monti gets named technocrat tick prime minister of italy, he comes out with a package two thirds tax hikes, one third tax cuts. and i remember saying do you think this will work, they're raising the v.a.t. tax and i understand italian household debt isn't that high, but they were trying to tax their way out of a massive debt problem and in fact receipts went down, consumption fell to 4.25 annualized rate and the situation got much worse. today italy has zero nominal gdp
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grets. and they're funding at 4.5%. that is a bad business model. spain same story. so when you bnk our package and what's been offered so are far which appears like $1.6 trillion in tax hikes against $400 billion of entitlement cuts over time, that's an even worse mix than the two-thirds/one-third european structure that really has gotten a negative reaction. >> how much is because of the mix and how much of it just this is what austerity looks like? >> is the money in capping deductions or raising marginal tax rates? it's in capping deductions. but that's tough because you have to tell someone no like the housing lobby or charitable contributions. >> capping deductions seems line the easiest. >> it should be, but remember,
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you'll have lobbyists pushing you on it. so that's tougher decision rather than raising taxes on one small part of the population and then on the spending side, making those long term spending cuts is the only way of stabilizing debt. the sink guegle biggest driver medicare. so if we don't make those tough decisions now, all we've done is a european style kick the can down the road and, you know, it's tough to cut entitlements and it's tough to cap deductions. austerity doesn't have to look like just taxing your way out of it. if you want to not work, you just tax your way out of it. >> i think we have to remember that this is politics and not economics going on here. that's the most important thing i think people have to remember. and we know we want more revenue and cut spending. that's why we have the problem to begin with. you have to accept that issue. le politicians aren't willing to accept that issue yet.
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both are at extremes. if you accept they're both at exseee extre extremes, how did we raise revenue. because the politics, not because of economics, they will not raise marginal rates. >> although we have heard some people say they would go along with that. >> i agree. the center is actually saying that. but i think -- so if the democrats know that, which everybody knows, give on that. let them get reelected, let them not wraz marginal tax rates. but ask for something else. get something else that will actually raise revenue the way we need to raise revenue. >> anything short of marginal rates, here's the times today, obama's end to giving in. there's a big piece in the journal also about that quoting all these leading democrats saying the president has to hold firm this final they're tieing a whole four years to this, the way this goes, so goes the next four years.
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so far he's under enormous pressure to stand pat. and boehner i think is under even more enormous pressure because a lot of people see boehner if the house as the last best hope for a voiding what a lot of people think is a calamity. >> but leadership isn't calling the other side names. i think when you talk about the big four, boehner, reid, pelosi -- >> no, not them. >> obama is on the legislative branch. we have to give him a break on that. but there are four big people. those four people couldn't be more inept. >> it's boehner -- the mcconnell and pelosi and reid have nothing to do with what's going on
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between boehner and obama. >> to some extent that's true. >> reid is the guy that pushed obama to extend the bush tax rates in 2010. so reid would i suspect -- >> i'm starting to like him more. i thought of him as senator pat geary from godfather 2. but everybody loves harry. there's a song everybody loves harry. anybodies that that has anything to do with casinos loves harry. just a quick question. you were a big cap guy for a long time. now dividends rates where going up. are you still a big cap guy? i've been a small cap guy. i'll tell you you why. >> when did you switch? >> this is a while ago. the reason why, number one --
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it's a growth story. >> do you like the natural gases play ms in small cap? >> the way we've invested, we haven't been looking at producers. we're looking at users of natural gas. i think that's been a little bit better. >> we'll hit that break at 6:50, the one that we keep -- >> let's do it. >> and write a six minute tease for that break. i'm going to have time to read the entire thing and people at the end of that tease, no one will leave before 7:00. >> because we never listen to the producers. >> the only reason people watch us is for those teasers. >> audience of one has been catching us missing. >> no, i think it's audience of two. and one guy beats up the other
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guy. they beat up each other. coming up, the ceo of cantor fitzgerald. plus if you're looking to beat the holiday shopping crowd, head to toys "r" us. the store opened at 7:00 a.m. yesterday and won't close until christmas eve. that's 543 consecutive hours. longer than their marathon last year.
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a major announcement this morning from cantor fitzgerald. acquiring one of ireland's largest independent stockbrokers, dolmen. we're joined by sean matthews, the ceo. good morning. how does this help cantor? >> we're trying to expand our distribution. there are a lot of opportunities where we continue to bolt on to our already big franchise and get into more countries and add content to our customer base. >> have you got relatives from that place? >> do i have a few. >> coincide with the resurgence of the fighting irish? >> i'm not a fighting irish fan, so hopefully not.
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>> is dolmen all over the uk? >> that's correct. they're predominantly in ireland, but you look at ireland right now, they're actually going through the reforms. they're trying to inject money in a credit fashion into their economy. and we certainly think we can bring our fixed income expertise and continue to help them. >> that would make sense for cantor. ireland was the mf-will first they were in trouble, then the model for the world. what got them into trouble again, housing or real estate or something or bad banks or -- and now again they're kind of a model for everyone on how to handle it. is that basically the last five years? >> absolutely. certainly was a real estate bubble there. now there are austerity measures being put in place and they're actually following through on the austerity measures. so certainly they'll come out first and actually look pretty good. >> so where is the most business for you for cantor in ireland, what will you be doing? >> certainly it's an equity based firm. we'll bring our fixed income
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expertise, probably become the primary dealer there. the irish government will continue to have to have bond issuances as well as corporate debt will start to become a much bigger part of their economy. >> who else looked at this firm, do you know? >> i'm not sure. >> it wasn't an auction process? >> it was not. i like the management of dolmen. >> how is cantor positioned for the fiscal cliff? are you just strapped in and ready to go over the other side. >> i think taxes will go up, twll be a lot of conjecture overs next 30 days or so, and then tell get a reality to that we have a problem, we have to tighten our boot strap, figure out how to actually inject money into the economy and how to cut some of the costs out of our
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government. >> you want to inject money into the economy and cut costs at the same time. how do you do that? >> certainly you look at the perspective you'll raise taxes on the higher end, but you're also going to have to cut some of the fat in the government. and that takes time. we need corporations to actually drive us out of this problem. the government isn't the solution here. >> the government is not the solution. >> correct. >> well, they are part of the problem. before a private sector solution, it seems like we have to get over this problem in the near term. it's a huge amount of money just being sucked right out of the economy on january 1st. >> i don't disagree with that at all. >> at this point, it's a one in in two chance, one in five chance, what's the chance we go over? >> roeprobably one in two, one s three. there will be some sort of
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resolution. getting down to the last minute kind of mentality, but certainly i think there will be a solution. i think next year you'll be in a low growth environment again and really if you look at the economy, we're probably going back to the '90 style economy where you had 3%, 3.5% was really good growth. 2% growth which we're experiencing right now is pretty good. full employment might be 5.5, 6% like the old days. and i think with that being said, we've got to to get a little bit closer to those numbers to really have the economy start to take off. and i don't think we're that far in there. >> any much those numbers we would take. i don't know whether we are or not. wishful thinking for cantor. certainly would help you guys. why didn't you like fighting irish? >> they were on tv every week when i was a child and i'd like
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to see alabama win. >> alabama won last year. >> that's okay. all right. thank you. see you later. in fact in some of the squawk sports news this morning, dallas beating philadelphia in sunday night nfl game. 38-33. tony romo threw three touchdown passes to break troy aikman's career franchise record. and the jets beat the cardinals 7-6. new york scoring the lone touchdown after mark sanchez was benched with tim tebow on the sidelines with a rib injury, greg mcelroy got the call. and last night -- >> i think rutgers could beat either one of those teams. >> up mcelroy came in, as a long -- as a jet fan, i will
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tell you it was a moment to be there for. >> did you watch where those passes were going, though? >> it's a w. >> it waumt sbepgs sn't intenti grounding, but it was as far away -- key have thrown the flag this guy. he was not in sync with the patterns. >> did you see the clorowds? >> it was great. >> he was at alabama about. >> that's right. >> and he's a good looking young -- >> i saw a highlight and i was half watching it and they said this is why they run play action. open up the space for sanchez. and i watch him throw the ball and it's an interception. i thought what are they talking about? >> i know that it's getting -- i'm starting to feel bad for sanchez. >> he has a guaranteed contract. >> i know, but he's over there taking notes and he's happy when the guy gets a td and he's just a team guy. i like him. >> when we come back, 'tis the
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season. it must be time for a jobs report. we whether set the trading agenda for the days ahead.
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please read the prospectus tdd#: 1-800-345-2550 carefully before investing. tdd#: 1-800-345-2550 welcome back to "squawk box." get ready for this music every day. andrew ross sorkin is off today. probably not awake i would say right now. i can tell you he's in the same time zone. but probably not up.
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definitely not watching. he may have someone watching for him, though, because he has a lot of people -- >> he tivos. >> but he's not at home. the place where he is like a staff, and he may have someone just watching cnbc that's their only job. they probably don't understand because they don't speak english, but they're probably watching us hopefully with spanish subtitles. let's check out the economic calendar. two key reports both due at 10: 10:00, october construction spending and ism manufacturing index. also today, the nation's automakers will report on november vehicle sales. and it's also the first week of december. do you know what that means? jobs friday seems to be less important than it used to be. just around the corner. here to give us his take on the jobs picture and the economy is anthony chan at chase wealth management and barry knapp and richard bernstein.
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have you ratcheted up things? 2.7 gdp, are we moving up in our expectations for jobless -- for adding jobs on friday do you think? >> i think we are creating jobs, but we'll have distortions as you probably know, we had a little hurricane here, sandy was terrible. that will subtract from growth. we also have the little twinkie strike which is something that everybody's worried about, so that will subtract. so when you net all those things out, you'll probably get a number closer to 90,000. but when you net those things out, you know in future months you'll get more growth. 2 pch 2.7, a lot was inventory based. so economic growth probably gets weaker. but as the rebuilding takes prar place, the strike resolved, no jobs no doubt. >> so in the meantime we go back above 8%? >> i think there's a chance that you can touch 8%, but i think
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you'll stay somewhere near the 8% range. >> if you had to make a prediction like i did, i had to make a prediction for where unemployment would be a year from now. i said somewhere in the 7s. >> i think by the end of next year you'll get a near somewhere in the neighborhood of 7.4, 7.5. still in the 7s. because again, we are going to glow next year something close to 2% and probably a little bit below that. that's not consistent with a huge deceleration of the unemployment rate. >> unless the participation rate continues to drop as people retire and no other demographic factors. then you could see it drop more quickly. >> you're right. in fact over the last couple years, labor force participation rate has been coming down and that's help willed the unemployment rate come down. one thing you're noticing, the consumer confidence number is increasing. as people get more confident, they start to being that they can get a job and as they think
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they can get a job, they start look and the labor force participation rate stabilizes and it might even increase which won't help. >> where do you put the chance of going over the fiscal cliff? >> i think the odds are somewhere in the neighborhood of about 15 ch about 15% to 20% that we go over. but my hope is that we don't. >> what happens to the market if we go over? >> i think we are going over, first of all. and i don't really think that we can get a good solution unless the markets force the issue. so one way or another, i think we have a near term correction. it either comes before the end of the year and forces the politicians to compromise now, or the beginning of next year and forces them after -- >> when does the bond market notice? i don't even care about the stock market. >> if you think you're going over the cliff, about the only hedge out there is like 30 year zeros. because think about what will happen. you'll slow the economy.
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they'll go to rates you couldn't believe if we really go over full bore. if we go right over with no solution at all -- >> what happens if we get a long term solution to all our problems? >> the thing you have to be scared of with rates is the thing you always have to be scared of, the economy actually strengthens. rates will go up. it will happen. >> even with the fed doing what it's doing. >> yeah, rates will go up. that happens in every cycle. that's the normal response. and i think what people can't believe is that the economy hasn't been as strong as people thought sand rates are lower. i don't see what's so shocking about that. >> because the stock market guys, you know, they watch bernanke, he indicates more qe, he doesn't do it, it goes up 100, goes down 100, and we end up right where we've been for the last five years. the bond market is the one that will really signal big problems. >> that's right. the way i characterize this no people, at the beginning of qe-2
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in november of 2010, forward pe was 13. beginning of qe forever in september, the forward pe was 13. the real ten year treasury yield, so ten years less inflation, had dropped from plus 1% to minus 80 baches poinsis p. cyclical sectors are getting cheaper and cheaper. so the fed is being successful at making fixed income really expensive, but part of that is the real economic outlook, too, which is so weak and we're not really in the wrong spot from a treasury market perspective. you were hinting at a good point, the treasury market rallied. the belly of the curve rallied pretty sharply. and the back of the curve actually steepened out which is what happens when we get into the fiscal difficulties. the market -- bond market is telling that you risk of the
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qul cliff is going up and i agree the stock market is in completely the wrong spot. >> but it will be what the politicians pay attention to. is this going to be t.a.r.p. 2.0? >> i actually think in a way that's a hopeful outcome because if we did have the selloff that forced them to compromise, a t.a.r.p.-like moment, that would be what i think it would take. >> here is my concern with that, though. it will be what it takes for them to make not difficult decisions which is to let all of this ride and let things continue like they did last time around, which is okay, we will continue with these tax cuts, we continue with dealing with the rest of of the stuff later. everybody gets what they want. and as a result you don't have any answers. >> remember we're in the situation we're in because they did push everything off. >> and if you push it off again, when is it ever -- >> think about quhapd in between. the stock market performed reasonably well. economy did okay. so everybody says that if we
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push this off, it has to be armageddon. that's in the his informatitori precedence. if they make some strides, maybe it's not so bad. >> still haven't dealt with our long term problem. >> i actually think that it will be more like a fiscal ditch than a sclif. you'll solve some of the problems, but not all. >> the guy that just buought cantor expect us to be back at 3.5% growth, 5.5%, unemployment. do you really think those days are coming? >> yes, but not in 2013 or 2014. at some point it will happen. >> we'll all be dead at some point. >> i didn't say in the long run. i said in a couple of years. >> i have a question for you which is you mentioned the confidence numbers which look so strong, but the spending numbers are weakening. savings rates at its low for the cycle. labor income and disposable income at its weakest point if the cycle. capital spending at its weakest
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point outside of a recession in the last 25 years. to me this looks like the underlying trends are all weakening. yeah, confidence is up, but consumer -- >> one of the things to keep in mind is labor income is weak, but that will mean corporate profits will be stronger, a little bit more capex. >> all i'm thinking about is 6:50. we have to do this tease at 6:50. thank you. if you have any comments or questions about anything you see here on squawk, e-mail us squawk@cnbc.com. when we come back, mall rats. what traffic at the stores is telling us about the state of the american consumer this holiday season. first, though, before we head to break, it is bcs selection time. announcements made last night include notre dame and alabama facing off in the national cramp i don't know ship game on january 7th. big news because number one playing number two.
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exactly what you want to see. and other bowls of note, cincinnati will be facing duke on december 27th. that's in charlotte. following day, rutgers will square off against virginia tech in the russell athletic bowl. >> the what? wow. is that the first year for that? >> not the orange bowl. big deal for brian sullivan who is a virginia tech guy. we'll be in orlando, nice and warm and sunny. we'll be right back. americans o work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪
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it's been a good start to the holiday shopping season and that means the malls are bus link. but which stores are doing better than others capturing
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foot traffic? the chairman and ceo of gym cher reality trust is here. we have early numbers from the retailers. and it was a little confusing because it included hurricane sandy and some of the downed parts from the earlier part ever the month. but what you saw at the end of the month and beginning of the holiday shopping season really has been pretty positive. >> we're feeling really good about it. when you look at the black friday weekend, we had sales up about 2.5%, traffic up 8%. people were out shopping. the real interesting thing that happened this weekend was 28% of the people were in stores before midnight on thursday. so the dynamic has really changed from what it has been in past years. >> does that lead to more sales? >> i think overall, 2.5% up for the weekend, actually on black friday probably down maybe 1%. it spread the sales out quite a bit. but i think the dynamic will change. people will start coming out earlier and earlier and the weekend will be a lot different than we've seen in the past. >> let's start about who is
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doing things right. you said macmacy's. >> it's all about the brands. i think they've done a wonderful job of reinventing may sis'ma m. and it's also about promotion. those who didn't open early probably did not see what macy's saw which was people coming in and lining up at their doors. >> i noticed over the weekend that they also did friends and family and a lot of coupons. so i guess it's a continuation. >> the customer sfantly wants a sale, they want a promotion, a reason to get out of their house. so those events, those early openings, that makes a difference between those who succeed and those who do not. >> so jcpenney, you can see them losing market share with same store sales. does that go to -- it doesn't go to nordstrom or neiman marcus or
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s saks fifth avenue? >> maybe some goes to target or -- >> doesn't go high end. so you can move some of the same store sales numbers right over to macy's? >> each season someone's stronger, each season someone has better goods. >> macy's benefited this time. >> absolutely they did. >> and jcpenney, do they ever -- when they do redo a store, they do much better. but you're saying they're not doing it right? >> we have them at about 60% of our properties. i you love their strategy. it's about implementation. if you look at the goods they have, levi's, sephora, the strategy is good. but how do you implement. how do you turn the stores around. that's really going to be the proof in the pudding of how do
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they perform. >> will they be able to? do you think johnson can do it? >> i think he has a great strategy that can work. the question is how long does it take and does the customer love it. >> houm of your stores have been the updated ones versus the ones that haven't been touched yet? >> they've all been touched with department, but not a full redo. so i would say at least half have been touched in some way and the departments that have been touched are probably up 50%, 60% over what was there previously. so definitely driving sales. just very expensive and very time consuming. >> do you have any malls in cincinnati? >> we do not. >> because they're like ghost towns. is that just specific to -- is it a problem everywhere with malls? >> we're 95% occupied. we have the highest sales we've ever seen. rents are up about 10%. it's all about location.
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>> what about target, howe ha h they done? >> they're off to a nice start. and it's all been about brands and promotion. >> besides jcpenney, is there anybody else you're worried about as you watch? >> we don't have a lot exposur to any one given retailer. we just think about the best locations. >> would you eventually just be in arizona and california, or just get out of everything in the cold weather? >> for us it's about density and income. we certainly like the warmer weather, texas, california, arizona, but we do very well in ohio. we did very well in west virginia. we do well in the middle of the country. just depends if you're the top one or two assets in that market. it's about being the best in
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that marketplace and i think you'll see fewer properties, but the good ones will only get stronger. >> is there one mall you wish you owned the short hills mall? >> there's a long list of malls that we wish we owned. the only thing we don't like about them is that we didn't own them. but, sure, there are many. >> is that the best one? >> it's certainly one of the top ten in the country. >> mall of measure, tamerica, t? >> it has lot of volume. it's a mall for everyone. people enjoy going there. so i'd like to own them both. why not. >> michael, thank you very much for coming in about that. >> thanks for having me. >> slip me your offer and i'll present it for someone up there. i don't want more than 20%. coming up, prediction time. 2013 forecasts from barry knapp and richard fing bernstein.
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if you have the k, say it loud. and in the next hour, most wanted. leadership to rise above. we are introducing a rise above meter. how close is washington to a deal. it's flat it's flat lining right now, our meter. we're about a quarter of the way there. we're going to turn to david walker to help to try and move the dial at the top of the hour. . if you're a man with low testosterone, you should know that axiron is here. the only underarm treatment for low t. that's right, the one you apply to the underarm. axiron is not for use in women or anyone younger than 18. axiron can transfer to others through direct contact. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these signs and symptoms to your doctor if they occur. tell your doctor about all medical conditions
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>> do you think they're going to find a solution? >> we know a lot about what the opportunities are if we don't. >> they don't want negotiate in public, obviously. >> we encourage congress to put
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aside the political rhetoric and rise above it to make sure we have revenue necessary in order to move this economy forward. final thoughts and predictiones from our guest host, barry knapp and richard bernstein. barry, what would you tell investors to do right now, you know, for the next month and then next year? >> for the next month, i have defensively positioned. what's worked in an environment where the fed is monetizing debt is stocks with bond like characteristics. it looks most like the bond market so that's what we're in. >> defensive stocks? >> yeah. utilities, health care and there is a portion of the market we would like to buy. the capital spending sensitive part, which has been the weakest bit. enterprise tack and industrial. but only on a correction that forces the politicians into what
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we describe as a good deal. >> so you don't do any of that now? >> no. for me, the market is in the wrong place given the massive deceleration and earnings we've seen and it's unlikely to change very much next year. and so this persistent fed making it more and more difficult to manage fixed income portfolios is probably going to affect that part of the stock market and keep a bid to it. but the more cyclical parts, i don't see them getting out of their own way for some time. >> did you already tell us you like small caps? >> wall street is now recommending the lowest equity allocation in 30 years for a portfolio. bond fixed income managers are about the most scary they've ever been. rates are going up. i think people are way too bearish. we all know about these issues. the market is smarter. the market has discounted this. i just think people should be more constructive on the markets. regardless of the politics. i don't care about that, as we discussed before. but the markets are --
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>> yeah, i was reading, they expect expandish bonds to -- they have been doing too well, supposedly, but all this bond buying over there, maybe it's starting to explode the situation in europe. that would be a positive, right? >> look, i'm knot more bullish in the united states as a whole. but i think the world as a whole is starting to heal and i think that's good. >> then you have the negative extra nowadays. i say what's the biggest threat next year? i worry about things that scare the hell out of my and that's iran or terrorism and stuff like that. >> that's the world we're living in. >> gentlemen, thank you. it's great having you for the first hour. should do this more often. >> all right. >> we're approaching the top of the hour. quick break right now and this morning's top stories when we return. watch this. >> announcer: in the next hour, he was once uncle sam's top accountant. now he's on a deficit crusade.
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playing politics with america's fiscal future. >> we're nowhere, period. we're nowhere. >> they would like to go beyond that or do it differently. >> but we're rising above it and putting your money first. guest host david walker of comeback america initiative and democratic strategist steve mcmahon both here to help us find solutions. >> then, what goldman's jim o'neill is so he seeing to help you prepare for your investments straight ahead. plus, adding opportunities door to door. >> have a good day. >> thank you. domino's pizza ceo patrick doyle is here. the second hour of "squawk box" begins right now.
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>> good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew is out this week. we've been watching futures this morning and they are indicated slightly higher. dow futures are up about 35 points above fair value, s&p futures and the fass dak futures are higher, as well. in your morning headlines today, the fiscal cliff dominating the sunday talk show circuit. treasury secretary tim geithner expressing on meet the press that republicans will accept the president's plan to raise income taxes. >> what we're trying to do is make it more likely we come together on a good agreement for the american people that extends tax cuts for the middle class. we're going to start long-term deficits down, tough savings is part of that and investment, things that matter to the
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american economy. like frut, things to help americans to get back to work. we have a good chance to it now and it's very important we're going to do that. >> secretary geithner said that if republican leaders have alternatives on reducing the deficit, they need the offer their propose yaels to the government. manufacturing activity in china has hit a new high. hsbc's manufacturing purchasing index came in at 55 in november. it separates expansion from contraction. and the latest twilight film was number one at the weekend box office for the thrt straid straight weekend. it took in $17.4 million in sales. that barely edged out "skyfall." >> that's a lot of money for "twilight." >> it's been a while. >> it's enough money, they all need acting lessons. every one of the actors in that movie, send them to acting sales. >> you loved the film.
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>> i didn't see the latest -- do you think i saw the latest one? that's insulting to me. it's a game of political chicken. the white house says republicans should come clean about how much they're willing to raise tax rates on the rich. republicans counter saying the president's plan is a joke that avoids tough decisions. we're looking to rise above the partisan politics and get a deal done. our guest hosts are looking to do the same. david walker is the ceo of the comeback initiative and steve mcmahon is a democratic strategist and co-founder of purple strategies. as you know, red and blue together make purple. but then there's dark purple, light purple, purpose that seems more red, purple that seems more blue. >> i would have thought steve would have been on purple today. >> it would have been good branding, wouldn't it? >> exactly. david, the only reason i'm starting with you is when you came out we spoke a little off camera. and you went, time for slogans is over.
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we need solutions. what you're saying is we know this but we're having trouble with it. and that is there's a short-term thing .there's a long-term thing. it's hard to look at the long-term when the short-term is staring us in the face, but you're telling us we need to do that. >> there's a way to bridge this and to save face on both sides. we need to recognize that the short-term challenge is the fiscal cliff. the structural challenge is what it's going to take to get a grand bargain. what we need to do is to avoid the fiscal cliff, have a down payments of both spending reductions and effective tax rate increases geared towards the well off. all right? we need to defer most of the major spending reductions and tax rate increases until a date later than 2013. couple that with a deferral of the debt ceiling limit to the same date so that we can achieve a grand bargain in 2013, which will be budget control, comprehensive tax reform, social
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insurance reforms, those types of things. we have to be realistic about what can be achieved before the end of the year and we have to build to achieving a grand bargain in 2013. >> steve, last year, we know how close everyone got and we also know that the president commission has been involved in all those people to come to a fix for our long-term problems. now, they came up with 28% as a tax rate. they came up with three to one in terms of spending cuts. the president is nowhere near embracing that at this point. we're so far from that at this point that it seems like the opportunity was mittsed last year. >> right now, the president's plan is at two to one. >> he can't get three to one done? >> and it's an opening bid. basically, they took it up to the members of congress last week and they said, here is our plan, where is yours?
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and the republicans laughed at them. >> how is it two to one? i've seen different numbers. 1.6 trillion to 400 billion or 600 billion. >> i hate to use the word fuzzy math, but they say basically there's a trillion dollars in savings that came from last year's budget agreement. >> that was already agreed on. >> but still it's spending cuts. from a democratic perspective, it's spending cuts without any corresponding revenue. then there's the war savings. it's real savings, but how much it is is kind of anybody's guess. >> why go to 39.6 if you're eventually going to 28? >> i think the reason to go up to 39.6 is to create pressure to get to 28. so i actually think david's plan is a great one. you have to give these politician necessary washington an opportunity to save face. the republican res fixated on rates. the president is fixated on rates. so if you say let's extend for a year the 98%. let's take the top 2% up for one year and the republicans, you
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have a year to basically find some other way to get that revenue. if you can't, they stay where they are. that would effectively push that part of the cliff another 12 months down the road, but it enables the president to get his higher rates next year. it enables republicans to get higher rates. then they find it or they don't. >> and here is the key. it's effective tax rates, not marginal tax rates. >> no, it is marginal. >> that's what i don't understand. >> they want marginal. but we're in negotiation. let me clarify what i mean, all right? the president wants to increase taxes on the wealthy. the republicans don't want to increase marginal tax rates. let me give you a concept the. the concept is pick the number. $500,000, $250,000, obviously wealthy is different depending on where you live. that will be negotiated. limit deductions and tax references for people above that level for one year, okay, that includes raise the cap gains
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rate for 15 to 20, but for only those people. do something on dividends, but only for those people. why don't you have those individuals not be able to get any deductions other than what i get and most mainstream americans do, the alternative minimum tax namely, mortgage interest and charitable contributions. that way, you can increase the effective tax rate of the wealthy without increasing marginal tax rates. then we can bridge to -- >> it seems to me, steve, that should be the democrats' plan. >> how many would say the president caved if he agreed to that? at least three quarters. >> look, this is going to have to be a deal that makes the left unhappy and the far right un'or it's not going to be the kind of deal that will get the middle together. here is the thing -- >> did you read this? >> but, joe, the republicans aren't willing to make the rich
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unhappy. 98% of america -- >> they just said they're willing to raise it in a way that they put revenue on the table. >> but they don't say what revenue, they don't say where it's going to come from. well, david does. but the speaker and mitch mcconnell are speaking very vaguely about revenue. they're not talking about specific revenue, where it comes from, they're not talking about specific cuts. they're simply saying, we're willing to raise revenue. well, that's great. why? what the president did this last week is he put a plan on the table and say, here is my plan. if you have a better plan, i want to see it. right now, wa he's doing, he's shadow boxing. they're saying things rhetorically, but they're not putting any specific -- >> it's december 3rd. >> it's december 3rd. >> but my concern is, the president put a big number on the table with regard to taxes and a small new number on the table with regard to spending. we are mixing things. we have to avoid the fiscal
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cliff, do a meaningful down payment on spending and taxes, build a bridge to a grand bargain. the big deal is going to be done next year. this year, the objective ought to be in the short-term reduce the deficit for next year and our long-term goals, baselines are gains. they could be manipulated by all sides. we have to focus like a laser on getting debt, public debt as a percentage of the economy down to 60% by 2024. that's what the focus of the grand bargaining should be. >> you've seen where you're trying to sell your house for $1 million and someone gives you an offer at $200,000 and you don't even answer that offer. >> right. >> but that's not what this is. it's december 3rd. it's december 3rd. >> and you know what? there was an election. >> that was not a serious offer that was made. >> well, it was an offer and the republicans haven't made a serious or nonserious offer, joe. >> you've got to go through the
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house. where is the house plan? >> well, i don't know. but that's -- >> stay tuned. >> our guest hosts will be with us for the rest of the program. up next, we'll talk about monday morning markets. goldman sachs jim o'neill is our special guest. find out if europe or the fiscal cliff is keeping him up at night. later, food for thought. our how dominos is handling economic conditions and their plans to hire for the holiday season.
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do you think this group of people will find some common sense solution? >> yeah, i think they will. i'm not sure thooes they'll do it by december 1st. >> we know a lot about the opportunities are if they don't. >> in private, in my view, he'll get to something. >> we encourage congress to put aside the political rhetoric and rise above it to make sure we have revenue
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welcome back, everybody. let's get a sense of where the market is heading in 2013. joining us right now is jim o'neill. jim, it's great to see you this morning. >> nice to see you guys. how are you doing? >> we're doing pretty good. i tate it you're having an easier start to the week than you did last week after the rolling stones concert, kept out out late on sunday? >> i was thinking it was keeping me up at night. last week plenty. but this week, not quite so much. >> let's talk about the fiscal cliff. is that worrying you at all?
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it's now december 3rd and it does not look like these two sides are any closer to reaching an agreement. if this is an issue that we don't find a solution to the fiscal cliff, we go over the edge, what is it going to mean for the global market? >> i was just listening and watching your previous discussion. you know, you guys are at a minimum lucky that the dollar is still such a research currency. when you compare the luxury, it seems that the markets are giving washington compared to the complete opposite with a lot of these cliff mad countries, the contrast is startling. to me, what's really in my head this morning is i detect more and more longer term investors and the cautious ones who are being influenced by this and start to go think, you know what? europe has dealt with some of its long-term issues even though the economies are weak and given the relative returns and value in market, i detect the first
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signs of people shifting more towards europe from the u.s. you look and listen to the kind of thing you guys were just discussing and, you know, it's like a bit of -- it's like a never ending game in washington. it's -- >> so you think we're actually in a situation where the talk in washington has turned much more dangerous and is driving investors away? >> well, i think -- i assumed, you know, washington likes its theater and this nonsense will go on right to the wire. it is not a deal, no doubt, that will come up and sellers will be a deal two weeks later. i think at the core of it, you know, the reality is particularly in democracies and where governments are returned on the majorities, it isn't easy to solve fiscal robs, as we know from many of the parts of the
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world. and win of the few things i've learned in the market is never let a cry sess go to waste and it's usually when governments start to put things under the carpet. even when there is a deal, it's not clear to me that there will be anything of marm substance. the other interesting thing this morning is the pmis we've had in china if a and europe are showing a shift to the better, albeit very modest and gradual. >> jim, this dave walker, you and i both know that with regard to the numbers in europe and the u.s. are a lot worse than advertised. and while the u.s. faces a fiscal cliff, which hopefully we can avoid, europe faces a financial cliff because the u.s. has restructured its financial institutions and europe has not. what about the practical implications of that fact? >> well, i think -- i mean, that
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is a big ongoing dilemma, but i think the thing that people are understandably relieved about, and here is a super mario moment, this spiral between sovereigns and the house of banks appears famous last words, but being broken a bit in europe. and that is definitely a -- so the absolute worst appears to have been taken out of the oh kwagz. but, you happen, obviously europe is years behind the u.s. in terms of reforming its private sector financial system and those continue to be an issue going forward. but i quickly have linked to what i said before. i know investors are looking at investing in european financials and haven't dreamt of that for years. that's a mood that has grown in the past couple of weeks. >> it's steve mcmahon. would you say the global markets are anticipating that america will go over the cliff or do you think global markets are anticipating this will be resolved somehow?
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i think the markets are assuming that even if there is some shift over the cliff, it will be temporary and some kind of deal will be cobbled together before the inauguration. is my best summary of it and that is really what i'm assuming. but i think markets are thinking there's not going to be anything dramatic and substantial. but i think people expect some kind of deal. >> part of the problem is people need to look at the rules in the senate. unless the senate changes their rule. if you want to reverse tax increases or spending cuts, you have to have 60 votes. that's what it takes in the senate. and nobody has close to 60 votes. that's why i think it's really, really important that we try to avoid this before the -- avoid the cliff before the end of the year if at all possible. >> yeah, you could be right. but as i said earlier, some 40,000 feet, if you look at the election outcome and the
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closeness of the control of the republicans and the democrats, you know, it's understandable, it's tricky. because the basic problem you've got is taxes are too low for the given level of spending. so one or the other has to give quite a bit or both have to give a little. and it's not easy to do that in such a divided electorate. even ignoring the games going on in washington, it's not easy. >> and we're dealing with a dysfunctional democracy which we'll have to deal with at some point. >> you coppel together these alliances between 14 different parties. you don't know what you have half the time over in the uk, do you? and the uk looks good compared to the rest of europe and asia. >> maybe that's another thing the u.s. is interested in learning. these governments are dealt with coalitions as the norm.
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take germany as one of the stronger at the moment. complex coalitions are stronger. maybe that's part of what the financial relate is that the u.s. has to think about. >> absolutely. >> we are new. we're still a new country. >> everything is relative. >> jim, thank you very much. >> i will say i think the pmi this afternoon will be very interesting to see what part of any of this is influencing sentiment against the background of stronger pmis around the world today. it looks like the world is going into q4 stronger than it was in q3. >> jim, thank you very much for joining us and we'll talk to you again soon. >> good luck, guys. >> tis the season for pizza. dominos is looking to expand and create jobs this holiday season. find out if you can help the bottom line of the country. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.
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wa year was that one? that had to be a long time ago. when was he? you weren't around. none of us. now, the indication is for a positive opening. that's just over a third of a percentage point. the strike at the port of los angeles in long beach is entering its seventh day this morning. contract talks are between clerical workers and shippers. the walkout has dramatically
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slowed activity. stock workers refuse to cross picket lines set up by union clishgal workers. we're going to take one more break. this is the way we do these things. we have to do a certain amount for every 60 minutes. if we have a long 15-minute period, they know we go back to back on something. if you have any questions, e-mail us squawk@cnbc.com. becky will see it. i won't. follow us on twitter. @cnbc.com is our handle. up next, dominos, the company's ceo joins us to talk jobs, the cliff and a fiscal break.
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welcome back to "squawk box," everyone. in our headlines this morning, the nation's automakers are expected to report an 11.3% increase in sales for november compared to a year ago. some of that is attribute knowledge to superstorm sandy. an estimated quarter million vex were destroyed. those numbers will be out this morning. it would only say that it is speaking to, quote, interested parties. but delta air lines is involved in those sdgzs. virgin is the second largest airline at heath row. and lenny dykstra will be sentenced today. he was found to have hidden and stole sports memorabilia other items that were supposed to be part of a bankruptcy filing. the game of political
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chicken, we were looking to rise above the partisan politics and trying to get something done. david walker, ceo of the america comeback initiative, steve mcmahon, co-founder of purple strategies, you guys have been on for a while and we've talked about a lot of things. steve, just 1:30 ag ago, you made a point talking about the bush tax cuts. and i said the tax cuts have been near and dear and you said at least bush was smart enough to know that we couldn't afford them so they were sunseted. >> so they were sunseted. >> that may happen. in fact, that may be the way that everybody gets to save face because the president could give a speech next week and he could say, ladies and gentlemen, we're going to go over the cliff. those of you who are worried about the markets, don't worry. >> so let's stop some of the sequester. sooner or later, you guys all
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want them to go back up. david, how much of the deficit, if we let the bush tax cuts sunset, how much of the deficit goes away? >> well, a significant percentage. >> like three quarters of it. >> it's not a good thing to do. it's going to push us back. >> when is it a good time? >> we need a down payment of both revenue and spending reductions, but we need to achieve four to five trillion over ten years through a grand bargain and we have to make sure that we're going to achieve a lot more than that beyond the ten years because we have 10,000 people a day retiring. health care costs are still out of control and we have to look long-term. that's why we say debt to gdp. >> somebody just sent in a really good question. that is with the president's health care plans, with obama care, does that change the debt to gdp in terms of taxes going
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up? >> it makes it worse. >> it's already going up. >> the affordable care act expanded cover an to 36 million people. it did not do enough to control costs. there are positive aspects of it, but according to the chief actuary of medicare, it's estimated to cost $12 trillion more in discount of present value dollars today than the politicians claim. we have not come nearly close enough to rationalizing our health care promises and focus on paying based on outcomes rather than activities. we're going to have to go back to health care again. and one of the biggest challenges, it's totally inadequate with regard to health care. and if you don't solve the health care problem, you don't solve the problem. first, it's the season for pizza, the hustle and bustle of the holidays means more business for dominoes and that means more jobs. your local domino sess expected to hire a few extra people this year. that can mean 5 to 25,000 jobs
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spread out over 4,500 stores in the u.s. joining us now from domino's headquarters in ann arbor, michigan, is domino's ceo patrick draw. patrick, are you -- can you do this? i really should recuse myself. i had -- >> he's already been eating the pea sxwap. >> and last night i ordered two pizzas and garlic bread. it was like $31, patrick. you guys are -- you're doing all right for yourself. i have to let becky do this interview because i'm bias. >> and did you deliver those pizzas? i don't think you did. i think we already did some -- how is pizza? you redid the menu. are you where you want to be in terms of the new menu and quality at dominos? >> yeah, we absolutely are. business has been great the last couple of years. you know, through the third quarter it was still strong this
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year. worry about europe a little bit. we've still held together there. that's the region of the world we worry about more than others. asia is still strong. latin america has held up pretty well. >> do you have plans to get any healthier? is that something -- i'm not saying you're not, but you know the way to political winds are blowing, you've seen mcdonald has some success and, you know, we're not even allowed to drink like 16.1 ounces in new york city. things are going in a very strange direction. does that factor into your thinking? pizza is not thought of as health food. >> you put a bunch of vegetables on it and it can be healthy. there are some menu labelling issues.
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>> when are you guys going to follow him right in there? if you look at the ties over here, they're disappearing quickly. >> cold pizza has been a staple for a long time. i think that's going to remain our core entrance into the breakfast market. >> yeah. you don't need eggs, either. it's basically bread, chicken and cheese. that doesn't seem like a -- usually i don't eat anything until like 10:30 or something. and one egg. you really shouldn't do that if you're up at 3:30, right? >> if you're up at 3:30, i think you need a meal. highly recommend pizza. >> how come the holiday sess a
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bigger time for you, patrick? >> you know, as families start to get together, as the weather gets colder, people tend to stay in. they're out shopping or they're just very busy. and they get home, they need something convenient and so we're out hiring somewhere between 10,000 and 20,000 people. that will stay through the winter. and they're great jobs. we're mostly trying to high drivers at this point. over 90% franchisees started as drivers. we're kind of this ieng ewe bader for entrepreneurs in dominos. come in, they like it. they work there way up through the system and eventually buy a store and it's pretty great story. >> patrick, this is dave walker. i had a slice of pizza and it was great. although i have to admit it's the first time i've had pizza for breakfast since maybe college. nonetheless, what has gone particularly well with regard to your new menu? what are you particularly
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pleased with? >> most recently, we launched a handmade pan pizza. it's a $5 billion to $6 billion category that we really haven't played in. and so it's a big important part of the pizza industry. it's a terrific pizza. i think you've got some of them there on set and we're very pleased with it. so, you know, overall, we were always the speed guys, the convenience guys, and as we have fixed the quality of the food, it's brought in a new consumer for us. >> actually, patrick, i don't know if we have the pan pizza over here. why don't you send a few over for lunch. >> no, it's not like that any more. >> we have seen some franchisees talking about like a one franchise guy or two, you don't have to worry about the 50 employee obama care deal. but i figure there are some people that own more than -- that own enough dominos to where that makes a difference. have you heard anything about that, that that is going to
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impact what their plans are? >> yeah. as a company, every full time employee has access to the same health care program that i have. but for our franchisees, if they're over kind of ten stores, it may start to affect them. the big thing is all the rules are not out yet. so if you look at the period that people have to be working for you for 90 days or a year, a number of these rules still yet to be announced and that's going to make a big difference. so our people are looking at it, we're helping them, we're educating them, but i think decisions are going to be held on how we're going to handle it until after all the rules have been released. >> it would make a big difference because you have so many seasonal workers for 90 days versus the year? >> yeah, just overall cost. as you look at the turnover and all the rest of it, it's going to make some difference to us. there's a 30-hour limit, but there's been some discussion as to whether or not that could be 35. 35 would clearly be better. so i mean, there's just a lot of these rules that are yet to be
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written and i think they're going to have a big impact on how people are going to approach it. >> so, patrick, let me try to take this from a difference direction from a democratic perspective. i'm not trying to be difficult. but there are two ways to look at the mandate that goes with the employees. one s a burden on business. the other is it's an opportunity for business to attract and keep employees, particularly in seasonal jobs that are difficult to fill. is there any trade off here? do you get something as you give something or do you think it's a bad law all the way through? >> honestly, steve, i think the answer is we're all going to find out a year from now. we're offering health care to our full time folks today. how this is going to affect business, how it's going to flow through, we're not going to know for a while now. first because uls you have to come, but secondly, i think there are a lot of things in effect that we're going do see in the marketplace for health care that nobody really fully
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understands yet. just an awful lot of changes coming through at once. so we'll see over time. >> all right. so salads just aren't happening for you, really, are they? >> you know, the lettuce and salads, people ask for them but, you know, it's interesting. at the end of the day, they like pizza. >> yeah, they do. >> that brooklyn style crust is outstanding. and that midweek carryout special, our kids love that. >> we're glad you came on today. we're all -- yeah. i can't think of anything bad to say. patrick, that you can. we appreciate it. >> thanks joe. >> you're in ann arbor. thanks. let's take a look at the futures this morning. we are looking at green arrows. in fact, right now, the dow futures are up by just over five. by the way, take a look at what's to coming this morning. up next, we have companies that could offer a special dividend for four years in.
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in the next hour, dick armey will join us. also, yale school management's jeffrey sonnan is here with a list of 2012 corporate shake-upes and who may be in the hot seat for 2013.
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a slew of companies declaring special dividend necessary recent weeks. three companies making announcements this week alone. what investors should do with all this, deborah morshard. this is a big deal. you're talking about tons and tons of companies that are now moving things. one of the situations this morning, pedo corporation just said that it's going to be moving all of its dividends for next year into the end of this year so that their shareholders can get that early gain on this and not have to pay the higher dividends tax next year. right. >> it's changing landscape.
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>> i know. it almost feels like they're talking about greece. people don't want to pay their taxes in greece and here you have all these people in america that are starting to complain about paying taxes on dividends. we're really just reverting to the levels we should be at a few years ago. we're out of vacation. let's go back to paying our taxes on our dividend peps. >> really strange, though. if a company is doing things like this, does it entice the shareholders to say, i'm getting my dif dennes and i'm not going to sell right after because i'm not getting any dividends next year? >> some of these companies are even borrowing in the debt market to pay these special dividends, which i think is a wrong thing to do. and i also kind of look at some of them and i wonder, why are they doing this? it seems like they're putting it shareholder first over their own company. shouldn't they put the money back into their own company, hire people, grow organically? >> if it's dividends you were going to pay out, anyway -- i
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don't know. i'm arguing both sides. >> sounds like the government, borrowing money to pay their shareholders. >> numbers are a lot different, though. >> i looked at companies that are awash in cash and might have a reason that they want to dump some of these cash out now. that is wa we did. we looked at those companies. and maybe companies that want to make nice with their shareholders, that maybe their shareholders are not so thrilled and maybe grumbling a little. >> deborah, if over time we move to the following scenario where we have comprehensive tax reform, we broaden the base, we lower rates, but not more than 25% to 28%, we eliminate the special tax preference between dividend, capital gains and ordinary income and as part of corporate tax reform we get a -- we give a deduction for dividends distranscripted, wouldn't that serve as a tremendous incentive for boards of directorses to either invest for growth and jobs or distribute for growth and jobs on a prospective basis?
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>> i would imagine so. it starts to level the playing field on the income line. >> i think rite now and human nature being what it is, people are going to react to what they know and what they don't know. longer term, you know, that makes sense to help improve economic growth, enhance our competitive posture, generate more job opportunities and i would respectfully suggest that's one element that could help. >> it would be nice to see long-term decisions rather than a continual short-term decision making. >> right. we are too my open onic by far. >> one of the challenges is that ceos think quarter to quarter and they're rewarded quarter to quarter. if you had their stock options vest ten years down the road instead of next month or next year, you'll see some decision making. >> ten years is a long time. >> but then you start thinking about the company and not the interest of next quarter.
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>> there's a 35% rate, that's not effective -- >> there has been. simpson bulls, it would go after the corporate taxes. >> in the president anticipates plan that was released on friday which seems to have caused the markets to move today up -- >> no, we got that -- that was friday morning. >> i'm kidding. >> taxes won't go up on dividends for people making less than 200,000. they'll still pay 15%. really, the people that are most concerned about this is the people making 250 and above. so you're back to that small group planning about this tax and tax ordinary income, you get rid of all that and you get rid of the advantages that the wealthiest people would take advantage of. >> deborah, walk us through the stocks. >> apple, tons of cash. and it's going to pull back lately and people have started
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to god forbid, talk badly about apple. we've never talked bad about apple and now you have critics coming in talking bad about them. microsoft, tons of cash. windows 8 not getting a ton of a great reception. so this is another way to make nice with the market, maybe gap. gap hs a ton of cash and gap has struggled for several years. they've just started their comeback. maybe this is a company. gm, giving big dividends. that's another company that so koo make nice for the shareholders. >> deborah, thank you very much for coming in. still to come, dave walker and steve mcmahon, and the nfl games, tony romo threw 3 touchdown passes to break troy
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aikman's career franchise record. "squawk box" will be right back. customer erin swenson bought from us online today. so, i'm happy. sales go up... i'm happy. it went out today... i'm happy. what if she's not home? (together) she won't be happy. use ups! she can get a text alert, reroute... even reschedule her package. it's ups my choice. are you happy? i'm happy. i'm happy. i'm happy. i'm happy. i'm happy. happy. happy. happy. happy. (together) happy. i love logistics.
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saying that dell's net cast level provide an opportunity for a leveraged buyout, perhaps, or a recapitalization. margins, marietta, steelers may explore a friendly takeover bid of vulcan materials. and i read that, like gravel d and -- oh, idea, in the journal. vulcan materials. that's where the star wars murveg is. starbucks is considering a change to its tax practices in the uk. the coffee retailer is drawing criticism for being able to
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report losses. and its uk operations are profitable among its overseas units. ubs is said to be close to a settlement of $450,000 with the u.s. and uk regulators on charges that it manipulated libor rates. and delta is reportedly among the contenders for a stake in virgin atlantic according to associated press. singapore airlines has confirmed it's erroredly selling stock in virgin airlines. would you follow the pope? >> is he tweeting? >> yeah. he's going to tweet. >> yeah, i think i would. >> as a practicing roman catholic, i will follow him. >> i will follow the pope. >> tweets would then be infallible? only when he announces that he's tweeting with infallibility. otherwise, no. >> he's not even tweeting it.
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>> he probably speaks about 12 languages. >> i'll bet he tweets in english. >> it's like 140 characters, so he's going to have to make a choice. >> are you going to cut off the pope? >> yeah. the pope speaks. rise above and be able to get more. >> you talk about the pope tweeting and you only go so far with anything you're going to see. i think it's a good idea. let's leave it at that. coming up, former house majority leader dick armey joinsous guest hosts, david walker and steve mcmahon as we search for a solution of the country's fiscal mess. ♪
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negotiating a deal on the fiscal cliff. they say a good compromise leaves everybody unhappy, but can house speaker john boehner rise above the partisan politics and still escape the wrath of his tea party? we'll ask former house majority leader dim armey. and we've seen some major executive shake-up these year. management guru jeffrey seinfeld will join us to grade the hires
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and fires of 2012. >> the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick. andrew ross sorkin is off today. our guest host this morning, steve mcmahon, co-founder of purple strategies and david walker, founder and ceo of the comeback america initiative. more from them in just a minute. first, we have some headlines for you this morning. let's begin with the markets and the looming fiscal cliff. the dow finishing november lower. and that is the second consecutive month. the blue championships fell .5% in november. 3% since the start of october. the nasdaq and s&p 500 did manage to finish higher last month. six out of ten s&p sectors
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managed to post a gain. consumer discretionary stocks were up the most. utilities were the biggest loser. while individual trading sessions have seemed choppy, it was another month of low volatility as measured by the vix. that's the longest set streak since february of 2007. u.s. equity futures at this hour are indicated up, added about 10 points, up about 54 points. that should be like .4 of a percentage point because it used to be .3%. i can do that in my head. overseas, in asia, things are mixed, but not a whole lot going on. and over in europe, mostly green arrows and pretty nice green arrows. up a percent in both france and germany. in corporate news in this morning, ubs is reportedly close to a settlement with the swiss
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authorities. ubs bank is expected to bay more than $450 million over claims that some of its employees submitted false libor rates. also, singapore airlines says that it is in talks with interested parties to sell a 49% stake in british carrier virgin atlantic. delta air lines is reportedly among the potential suitor peps among the draw, delta is said to want to gain access to virgin's landing rights at london's heelth row airport. david walker is the ceo of the comeback america initiative and steve mcmahon is the strategist and on co-founder of purple strategies. steve, i want to lay out some sort of an idea. we know the president has said that he's going to stick to his guns on this and this is really going to happen. but if you actually see the country going over the fiscal cliff, you see these huge spending cuts kicking in at the same time as higher taxes, i know the thinking is the president can say this is the
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republican's fault for doing this, but do you think he'd really stay over the cliff given what that would mean to the economy in such rapid fire fashion? >> i think the sequestration is more of a problem thax the tax rates. sequestration requires very big cuts very quickly which would jaw the economy. i think the president could give a speech over the next two weeks, prepare americans for going over the cliff and it's not guilty not going to be a big deal because tax rates are going to revert to where they were and the serious conversations with republicans begin. it gives everybody an opportunity to save face. the president gets what he wants. all the tax rates are go up. he can pull back the 98%. the republicans won't go against that. so in some ways, it works in everyone's political interest. sequestration is a big problem because if that goes into effect, the country certainly almost goes into recession. >> the sad thing is, we're talking about politics versus
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policy. it would be irresponsible to allow the fiscal cliff to occur. we're talking about who is going to get a political advantage, who is going to be able to save faes. look, there's a way to avoid the fiscal cliff, do a down payment on both spending and revenue necessary a way that saves f for the president and focus on what we need to do and that is dealing with the structure deficit. we've got to go back in health care costs again. we need to reimpose tough budget controls like we had from the early '90s to 2002. how we do it and when we do it matters. we don't want to cause another recession. it is december 3rd. we are not talking about any serious conversations at this point to do any of those things. >> first, it's inappropriate to think about that in a lame duck
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session. you need to engage the american people. here is the good news. i just came back from a 10,000 mile national responsibility buster, check it out at keepingamericagreat.org. insurance programs, taxes, defense, etcetera. so the people are way ahead of the politicians. they're starved for truth, leadership and solutions. >> but they agree even when they hear the details? >> yeah, they are. >> what some of the polls showed on election day is that the exit polls, at least, is that americans were in favor of it. >> but here is the problem. the polls are incredibly oourch superficial in this reading. they ask people questions without building the case as to the seriousness of the problem and the consequences. for example, what do you expect people to see when you talk to them? do you want to pay higher taxes? but what we did is within 15 minutes, we built the case of a burning platform. and after you do that and arch
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you get agreement on a set of principles, we got 92% agreement on a set of principles and a minimum of 77% of -- >> i don't mean to be partisan here, but the republicans won't agree that math has any role in this conversation. the idea that's you've presented are great ideas, but you're sitting here in a television studio -- >> look at it from either side of the aisle and both sides have blinders on. >> hold on for a second. maybe sunglasses. but the democrats agreed to $1 is trillion in cuts just a year ago with no revenue increases and the president's plan has $600 billion in additional entitlement cuts. now, the question for the republicans is where is your plan, what are you going to do? how are you going to generate -- >> but 250 in entitlements and 350 in -- >> it's 600 billion. 400 specified and 200 unspecified, which you would argue about whether that ever happens. but there's real money on the table in the democrats' plan and
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none in the republicans' plan. >> neither party has a credible plan to restore fiscal sanity. here is what the goal should be. number one, we can have smaller government, spending less than 24% of gdp and have a sustainable social security safety net, a reasonable level of universal health care that we can afford and sustain. >> catastrophic universal health care is what you're talking about? >> preventive, wellness, catastrophic. the government is always going to do more for the poor, for the disables, for veterans. >> we would have to change obama care, then. >> we would. >> but that's not what we have. >> secondly, we have have lower percentages of gdp but higher than the historical average. we can stabilize debt to gdp if we get a grand bargain this next year and phase it in. >> can i ask the specifics on
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that? i heard specifics on npr today. for medicare, it's to raise the age to 67 from 65. it suggested that rates would go up on everybody, both everybody inside and outside that poll because you were taking the healthiest people from medicare and taking them out of that pool. >> that's another step you can take that doesn't generate any significant -- $115 billion over ten years. it doesn't get you out of the hole that we're in. perhaps a small step, but it doesn't get you there. >> believe it or not, when medicare was first started, the premium subsidy was 50%. now it's 75%. people don't pay for their medicare part d&b benefits. one of the things that we could do is to make the premium
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subsidy more means tested. if you do that, a, you generate more revenues and, b, it counts as a spending reduction the way that congress does it. that's truly balanced. that's big money. it's one thing to give universal opportunity. it's another thing to give universal subsidy. you know who is paying that? our kids and our grandkids with interest. it's irresponsible, it's immoral. >> david, would you rather have some toothless kick your can down the road solution to going over the cliff or just go over the cliff? i think going over the cliff is preferable to -- >> i don't want to go over the cliff and what i want to do is -- >> would you rather go over the cliff than have a toothless delay again, no cuts, just -- >> no, no. i think we need something credible. >> that's the main worry that people have. >> we need to look at a one-year
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deal, not a ten-year deal. a one-year deal. we need to have the tax cuts extended, we need to have some defense and nondefense cuts, but not as much to see quester and we ought to tie the debt ceiling limits to this, too. you get all of those coming together. >> i would make him -- in walking dead, the leader, rick, says this is not a democracy. there is no more question. i would make you czar right now. >> would you allow -- >> what david is proposing is perfectly responsible and it's the conversation we should be having as americans. but the conversation we're having instead is are we going to raise marginal rates? it's ridiculous. it's crazy. >> but then as a democrat -- >> i'm sitting here as a democrat and i'm saying that. >> but you still won't put the leadership onus on president obama. >> the president has put forward a plan. >> you said that like six times already. i saw the plan. >> have you seen the republican's plan? let's ask dick armey when he
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comes on if he has the secret republican plan. >> here is what has to happen, all right? the president needs to take a page out of president bill clinton -- >> he's in philadelphia with the middle class behind him and nodding and saying, i've got a pen, i've got a pen. i've still got a pen, i've still got a pen. >> president obama owes president clinton a great deal for helping him get elected. number one, we need a meaningful citizen education engagement effort with the white house in formada, next year to build the case for a grand bargain. the official version of what i did and what my colleagues did over the last several months and we need congressional hearings that will set the stage for tax reforms, social security reform and the president needs to negotiate privately and have discussions with congressional leaders of both parties privately. those three things can get us to the promt promise land. and without all three of those, we're in trouble.
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>> but, david, that is exactly what was supposed to happen between july of 2011 and today. and guess what? none of it has happened. none of it. we're having the same conversation. >> you know what? >> only the president can lead. only the president can lead. >> he has the pen. he has joe's pen. >> mine is a viagra pen. wouldn't that be embarrassing if he held that up and said i have a pen? >> i don't know why you have a viagra pen, but maybe we can go into that later. >> i don't think we want to go there. >> we will be back with more with david walker and steve mcmahon. >> before we head to break, one more story that we're following, crisis says november sales were up 14.4% compared to a year ago. that's above estimates. increased analysts say november sales overall benefited in part estimated quarter million vehicles destroyed or damaged by sandy, as you can imagine. when we come back, he advised house speaker boehner on
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how to handle tea party members in congress. former house majority leader dick armey will join us with more on this task of fiscal compromise and what he sees happening. also at the bottom of the hour, the top management shake-ups of the year. jeff sonnenfeld will join us with the fiscal corporation movement of the year. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪ nespresso. what else? and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant
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>> republicans have said that they don't like those reforms. they like to do more. and if that's true, then they should tell us what they would like an an alternative or as a compliment to those. if they would to build on those, they can tell us how. but we can't react until we see the details of a proposal. we need it on the rates and revenue side as well as on the spending side. we've given them our best deal, what makes sense for the country. >> meantime, house speaker john boehner says his party has a plan and he's already offered dozens of alternatives. >> we can cap deductions at a
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percent of income. that would be one way to get there. you can eliminate certain deductions, for the wealthiest in our country. >> speaker boehner has turned to our next guest for advice. dike armey is former house majority leader. leader he armey, we haven't seen new a while since the election, i don't think. how do you -- what's your description of the landscape that we see right now with the right and left and the fiscal cliff? >> well, obviously, the president and his party are quite full of themselves. frankly, they had the victory in the last election cycle. they think it's a mandate. this -- the democratic party today is probably as poorly schooled in economic finance as any political party any place in the world today, perhaps ever in the history of the world.
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they don't have a plan and i get tired of hearing about their plan. they have a mantra, but they don't have a plan. they don't understand, for example, if you're going to have growth in the private sector, you have to have investment by risk takers. i'm 72 years old. i'm not going to take any risks. most people my age, we want dividends, we want security, we want stock, blue chip stockes and dividends and bonds. the venture capitalists provide the -- these are exactly the people the democrats think are somehow undeserving people that should have their money taken away so you can build government when, in fact, the biggest problem we have overall comprehensively is this government is too much of a burden on the big economy. poor old president obama, he actually believes that more
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government is always a better thing. simply doesn't understand the way the economy works and doesn't show any desire to learn. having tim geithner, a rough secretary in a rough congress trying to work out a deal while the president is playing golf is frankly not a very good basis by which you would project success for the future. the president needs to school up, go to work or get to the table. i don't think he's willing to do that. >> you know the house pretty well. they have an election every two years and they got elected again and they've got constituents that sent them there for a reason. and then you've got the president would is just -- you know, just being hammered by the left on not caving this time around because he got so much
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grief the last time. this is setting up for us to go over the cliff, isn't it? what do you think? do we go over it or not? >> yeah, it is very difficult. and i feel bad for john boehner. he's in a difficult situation. i did want to remind john that he should look at the young, newer members that are so difficult to persuade to make an easy deal compromise. and remember, it wasn't too many years ago, john, that was you and me and we were driving bob michael and president bush nuts when the democrats were offering them, give us the tax increases now, we'll give you the spending cuts later and we were saying, oh, no, they'll never keep their word on the spending cuts. they'll tax the tax increases. quite frankly, the speaker has a difficult role to play here. he's seen by so many people as the principal guardian of our
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liberty and of sound economic policy within the context of the majority senate that frankly just think it's good for the country for the government to be bigger. the government is counterproductive to the performance of the rest of the world. >> thank you for coming on. >> i would respectfully suggest that the government is grown too big, promised too much and waited to long to restructure, but it's not too late. and i would also respectfully suggest that both political parties are responsible for that. >> absolutely right. >> we need comprehensive tax reform. and what i'm concerned about is that we're not differentiating between this fiscal cliff, it's the symptom, and the disease, which is the large and growing structural deficits that lie
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ahead. i think we need the bridge to a grand bargain next year. and i have one concern that i like your reaction to. to the extent that you can deductions for a higher income, i'm concerned that that would have a serious adverse effect on charitable contributions. what i would rather see is to put the wealthy as a temporary bridge strategy in the same position as the middle class like myself who only get deductions because of alternative minimum tax on mortgage interest and on charitable contributions. that's all we get. and you have to end up eliminating every other deduction because of the alternative minimum tax. and so i think we need comprehensive tax reform that simplifies. i know you agree with that, but we have to be realistic about what can be achieved in the next 20 days or so. what do you think? >> no, i think you're right about that. there's just not much you can do in these kinds of sessions.
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i can't resist steve telling you to google me. google the armey curve. this innovation has been around and there's much talk about it across the globe which addresses this question. at what point is the government so big that you pass the point of diminishing returns and the government is a counterproductive impact on the rest of the community? and, dave, that's where we are. we've gone past that point where the government adds value, but as you grow it larger, it deducts from the overall value of the political economic enterprise. and i'm proud to see that it's almost all of on eastern europe and most of asia and latin america. they're having this debate about how much government is too much government and they're using the army curve. so i want to reintroduce it and get a bright guy that steve to go around and tell all his
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democrat friends, this is the instrument that will show you the way. now, on the question of deductions, obviously, the flat tax is and has been the correct answer for a long time. but when we looked at the question of charitable deductions on this, what we discovered in the '80s was even though you reduced substantially cut in half the tax value of a charitable deductions, charitable deductions went up because incomes rose as the economy expanded. so i mean, again, i'd like to see us get to that comprehensive reform. one caution on spending reform on the entitlement. the president believes that you reform entitlements by cutting back on what you pay health care providers. take a look at the number the health care providers that are simply dropping out of medicare and you have a consistent pattern of limitations on who
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will participate in this government controlled system? now, if you take over if whole health care system, i guess in that case, if you want to practice medicine, you'll practice under the, you know, control of the government. but there's an awful lot of people right now that are saying, you can't solve this problem. let me give you this -- >> hold on. i think -- >> why not let medicare be voluntary? >> steve is sitting here and i think you've turned him. let's just, leader armey, steve mcmahon, good to see you again. >> he's purple. he's going red. >> your old sparring partner. i have a question for you. let's begin by stipulating that i have a slightly different view of who has a plan and who doesn't. but let me begin by asking you a different question because you are the founding father of the tea party movement and i don't think you get enough credit for it, but you get credit with me that you've released these people. >> that a pejorative in these words. >> no, no, i don't agree with
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them, but the leader did a great job getting that movement organized. but now we have to deal with it. so my question is this. it looked hike a year and a half ago, speaker boehner was willing to raise revenues by $800 billion. it's not clear to me that he had the votes to get that done. the president has put on the table $1.6 trillion in revenue increases. what do you think is the biggest number that a tea party member could support? is it 800 billion? is it 600 billion? is it a trillion? what would that magic number be? >> with respect to a tax increase? >> well, with respect to a revenue increase. so let's assume for a second that the tea party could get a revenue increase of some amount without affecting marginal rates, which i don't think is problem possible, but let's assume that. >> we need a quick answer, because we have a hard number. >> first of all, what is difficult for washington to comprehend about the tea party activists and the tea party
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members is they don't care about political outcome. they're looking for good policy. so they're saying, let's start first thing is first. the problem is -- >> 20 seconds. >> -- we are inefficiency taxed. the government is spending too much money. get on that side and fix the spending problem. >> wow, i get it. we have to -- we have numbers at 8:30 that we have to hit. usually they're meaningless numbers, but we do have to hit them. leader armey, thank you very much. we appreciate it. >> thank you. coming up, several companies announcing special dividends this morning. we have stocks to watch right after this. tdd#: 1-800-345-2550 let's talk about low-cost investing.
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this is the latest to do so ahead of the year-end because of the fiscal cliff. cato has declared a special dividend of a dollar a share and has moved up all of next year's payouts into this year. cato specifically cites the fiscal cliff and the possibility of higher taxes on dividends come january 1st. hospital operator hda has declared a $2 a share payout. it's going to be paid on december 31st. and the money will be raised through a proposed debt offering. and dish network has declared a dollar a share.
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>> we are back now with more from our guest hosts this morning. david walker is the ceo of comeback america. steve mcmahon, purple strategies. when the cameras aren't rolling, you love and respect leader armey. >> well, one of the things that happen in washington is you're in these green rooms all the time and i don't agree with him on anything, but he's a terrific guy. >> i saw a parity and ann coulter and al sharpton got off appearing on some show and they high fived each other in the green room and they were calling each other honey and what's our next gig, where is it going to be? and it was totally, hate when they're out there arguing. >> they're human beings. and it's the way washington used to work. people used to socialize together, whether they were
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democrats or republicans. they built an entire notion on the company that you can get democrats and republicans to work together to solve business and brand challenges. that's the key issue. >> they don't know each other. they don't socialize each other. there's a taint with doing it. let me give you an idea. we've got a fiscal cliff now. we have the fiscal abyss next year. we need to say, don't come home. no deal, no break. members should be in washington at least five days a week like every other american and not leave until they deal with the fiscal cliff this year or until we get a grand bargain next year. they would pull off seven times more days -- >> david faber tweeted this morning that they should be locked in a room and forced to listen to the animal orchestra until they have a deal. >> david faber's hair. >> you put them in a room. you tell them they're going to sit there until the deal is done. day three, no more food.
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day five, no water. day seven, the waterboarding begins. that would get it done. >> and the president should be there, too. >> the president does work five days a week. >> but not in the same room. but he is home. he's already home. >> but listen, they spend too much time raising money. if they did a good job, they wouldn't have to raise as many money. if they got paid for performance, they wouldn't have any money. >> are you going to run for linda mcmahon's seat? >> she doesn't have a seat. >> i know that. but was that the same one she was running for? >> i was included to run, but i declined. >> nice job. nice work. >> that committee is dysfunctional. >> you could have won. >> yeah, i could have won. >> you could have been a contender. >> but america can win if you get down there and solve this problem. >> if they would just do it, they would be fine. it's not that hard.
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>> we make it hard. >> we'll be back with more from czar walker and -- do you want to be a czar, too? i'll be a czar today. what the heck? >> we've got about 30 czars at the white house already. still to come this morning, no big surprise winner at the weekend box office. but a major star's new movie, we will tell you which one right after this. plus, the top executive shake-ups of 2012. jeff sonnenfeld will bring us a record card of the new corporate leaders.
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welcome back to "squawk box." "twilight" took in first place again at the box office. and it was a rough start for brad pitt's new movie, "killing them softly." it finished seventh at the box office. the movie starts as a gang are on the trial of two small time crooks. when we come back, we'll take a look at the year's top management shake-ups. citigroup, yahoo! ibm and a lot
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more. jeff sonnenfeld will join us after sth with the best and the worst run down stories.
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welcome back to "squawk box" here, everyone. 2012 has been noted by some management shake-ups. some are good, some are bad and some are ugly. joining us now is jeff sonnenfeld. jeff, it's great to have you here this morning. >> thanks, becky. good to be with you. >> nobody knows corporate
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management better than you do. why don't we take a look back. tell us first of all what you think maybe the one or two best shake-ups were just in terms of where management success is headed in a company. >> some of the changes that were kind of interesting, is companies like yahoo! ibm and hp. to all be headed by truly brilliant experienced women who have earned their stripes. we can talk about how each is doing on the job, but it is quite a break through year to have these technology titans let by such accomplished leaders. but i would say the moves at apple, as tim cook has found his oats and a critical top lieutenant under jobs was a bold move and widely celebrated, but not initially understood. jenny romini at ibm, it is an incredible story. they've had, you know, a little bit of market disappointments most recently. but it's been a tremendous
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story. they know what they're doing there. she has been the architect of a lot of the success under sam palmasano. a genuine engineer and marketer combined who has been leading the future of ibm for quite some time in terms of what the new plan with analytics and new ways of their customers communicating with their own customers. speaking of yahoo! marissa meyers, she's taking them in a somewhat different direction and seems to be so far doing well. mark fields, in heavy industry, we don't focus enough on some of the important changes that dow, andrew livers is doing. of course, even ellen coleman has been doing at dupont i don't think are well understood in terms of shedding some of the generics, in terms of getting some of the higher end in terms of commodity businesses. but some great reorganizes
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taking them closer to business units. but mark fields of ford is probably one of the most exciting things, seeing that the succession plan is mapped out with andrew, you know, allen mulally giving hymn his hand. and mark led mazda in his 30s. and this past year, he's had remarkable historic record results. and ford north america. he's the new ceo there and a great partnership with mulally. so i think we see those, it's the good news. >> let's talk about some of the ones that have been raising questions. you mentioned meg whitman. obviously, autonomy didn't happen on her watch. but she is now satellited with a tough situation. what is that going to mean in terms of what she can and can't do with the company?
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>> well, i am very optimistic about meg whitman and hp. what's the uncertain? at hp, it's the story that's not well understood. leo, obviously, made a big mistake and i think the proper due diligence, it looks like it was done with the investment bankers in to sets of premier auditing firms. they clearly have fraud in there and the whistleblower, who i'm happy is still employed by hp was somebody who was a direct report to the ceo that was terminated of autonomy. >> was there $5 billion in fraud there? it want an $8.3 billion write-down. they didn't call it fraud, but
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they called it financial maneuvering. was there fraud there? >> it certainly looks like fraud. and you're wondering why is the ceo out there speaking. like governor blew gagojevich. his lawyers couldn't have been in favor of him being so public right now. but you take a look at the different business units. meg whitman is in a complicated legacy. but product line after product line, they've been investing a lot of the cash flow that they have back in the business. the business has been starved for cap ex investments for a while. you're seeing actually groom strong product business unit leaders. the history of hb almost to a fault, with really strong business unit leaders. and under mark herd that had dissolved. they had some of the independence had been lost to these business units. even printers, which were
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somewhat flat, and we've seen with software things are growing. is that they have a tidal wave of new products coming out there. and maybe on the retail side, not so strong with the consumer, but they really have a very good lock on the enterprise side. i think her plan is yet to unfurl here, the result of it. >> jeff, our guest hosts have some questions for you. >> steve mcmahon here. i'm just wondering in a day of instant media access and programs like this every morning, how much time do ceos have to turn a company around and how much leeway do they get for the fact that they're saddled with innovation and research that has been occurring for a long period of time and they inherit product lines that aren't things that consumers value as much as they should? >> steve, that's ral interesting question. the short-term is rampant. i was recently with the past head of faseq, the chinese ministry that controls state ender prices. he was arguing that they stopped
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the conversion of state enterprises to become public companies not for all the reasons many of us attribute, but because he said they can make long-term investments because of the short-termism of financial markets doesn't allow and that they can take some big betts. i don't know, but you can take a look at a company like jk penny with ron johnson. even every retailer, except one, who said give this guy more time. but usually the short-termism is a problem. you can see that the advisory firms, they have these ridiculous metrics for one year and three year barometers. it takes two or three years to fully take charge of this. and i think you're right, steve, the metrics are too short. sometimes if they are on a misguided path, we can correct it. vickram pandit, i frankly thought was mercuriel and
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imperious when he first stepped in there. he grew enormously in office. maria bartiromo had a tremendous interview with him. i thought he was defensive, yet his board understood him. board politics. >> i look forward to seeing you at the yale ceo summit. >> hi, dave. you should have run. joe is right, you should have run. >> we've already made him a czar. >> you end up consulting with a lot of ceos, a lot of corporate boards. from your perspective, what impact is the fiscal cliff having with regard to the situation? we've seen today a number of special dividends announced, debt finance acceleration of special dividends. what is your perspective on this and the impact on corporate leaders and boards? >> you know, i think it's quite fluid. even quite fluid with individuals. you had steve ratner on here
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last week. he went over right after you the next day and his predictions where consumer is strong and we're seeing a big gap between where ceos are who are much more pessimistic. as steve was arguing, they're holding back and expecting the cliff is going to come and we're going to go over the cliff and the consumer and the individual investor in some cases don't understand that. and yet i just saw yesterday on another network, steve ratner was saying, you know what? i'm hearing different things now. it looks like we may, in fact, somehow keep this from careening off the cliff. so we're seeing an awful lot of people that are unsure how to read this in the course of a day. the sentiment seems to be so fluid on it. there's nobody on this planet who has been calling this thing longer, david, than you. way, way, way back, i remember the 16 minutes profile and things. what a clarion call you put out there.
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i can't imagine how frustrating -- >> it's gotten worse and worse. i want him to shut up ever since he started and it's gone straight in the crapper. >> the public is much more engaged. >> look at the record. >> 2006, down to washington. >> the thing that i'd love to hear david comment on, and i know it's not fair for me to b whatever in the devil is going on with the governor of bank of england and how that was named and what that says about taking a canadian in there. david would know this. i think it supports what bob diamond was saying at barclays. there's still more of a story there on what happened. >> we'll come back. see you next time. >> coming up, don't start your trading week without a healthy dose of cramer. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air.
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>> welcome back to "squawk box." jim cramer is standing by at the new york stock exchange. what's on your radar just in terms of the stock market and individual issues? >> i think these companies with great balance sheets returning capital. they all believe that tax rates are going to go up dramatically for dividends. i thought it was dell sell to buy goldman. either something has to happen big at dell whether a special
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dividend or possibility of a leveraged buyout. i think this is an incredible call from an outfit that hated dell. >> i wonder what that would look like exactly. what do you think it's worth? >> i don't know. they have so much cash. they do believe the future is going their way. they're not the least bit upset about the notion that apple is doing well or that there is this bring their own device thing that doesn't help them. michael dell is bullish on his own enterprise longer term. what are you going to steal a company for? 35% up? >> people don't really know what the company does anymore, do you think really? >> no. i think you're so right, joe. they would tell you that they're an enterprise hardware and software consultant company and not a pc company. it's just that the pc business has continued to drag them down. >> you can get it with a 3.25% yield at a low. it was 8 and change and now it's
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9.64 and high is 18. we remember it in the 30s and 40s i guess. >> at the same time michael dell is a proud man. he does recognize that like everybody else, incredibly frustrated with his own stock. i think he will take matters in his own hands. not only like steve did not that long ago with seagate before he took it private, i think michael dell could do the same thing. >> jim, great performance on "meet the press" this weekend. >> thank you. >> really good stuff. rise above. when we come back, we'll get the last word from our guest host, david walker and steve mcmahon. stick around. >> tomorrow on b"squawk box," h runs the lone star state. guest host governor rick perry will join us to talk taxes, fiscal cliff and growth in the economy. you can't afford to miss "squawk box" tomorrow starting at 6:00 a.m. eastern. if you think running a restaurant is hard, try running four.
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options with supervalu including purchasing the entire business or just albertson's stores. >> let's get back to david walker and steve mcmahon for the last word. i say fiscal cliff, david, you say? >> we have a short-term ficscal cliff. we need to deal with the fiscal cliff. have a credible down payment on the tax and spending side. bridge to a grand bargain next year. the fiscal cliff is the symptom. structural deficit is the disease. we need to learn from australia, canada, new zealand, sweden. we need to do it next year. >> all right. >> get dr. dave to washington right away so that we avoid what cramer on "meet the press" this weekend had great line. he said on january 8th when the reporting starts, there will be a foot race to fire people if we don't get this cliff taken care of which is why if we're going over the